Jeggings, Military Basics and Discounts: Top Trends for Back-to-School

Top trends for back-to-school? Jeggings, military basics and backpacks.  Top trends for retailers’ back-to-school sales? Deep discounts, tax-free weekends and better-than-expected results.

Back-to-school same-store sales were up 3.3 percent based on August sales results, as reported in a summary of 27 retailers by Thomson Reuters.  This was an improvement over the 2.5 percent increase expected by analysts.  What were some of the reasons for this increase?
  1. The 2010 back-to-school sales increase is being compared to the same period a year ago, in which sales declined 2.8 percent.
  2. Back-to-school tax-free weekends in almost 20 states helped attract customers.
  3. To bring in sales, retailers offered steep discounts but hurt their overall margins in the process.

The tax-free weekends helped to draw in customers early, but still retailers saw consumers coming to stores at the last minute.  Perhaps they were waiting for the best sales?

Retailers heavily promoted jeans and jeggings, along with other trends, to attract shoppers.  Teen favorite, Abercrombie & Fitch, offered 40 percent off all jeans and “jeggings.” Similarly, Aropostale promoted all jeans under $20.  The promotion worked for Abercrombie, who reported a 6 percent same store sales increase, but this was perhaps at the disadvantage of competitor, Aropostale, who saw a 1 percent decline.

Both Abercrombie and Aropostale discussed the effects of discounting in presentations to investors. Abercrombie said its average retail price per item decreased 15 percent, and Aropostale said that merchandise margins were down slightly compared to last year.

The back-to-school sales increase looks promising, but there are still concerns for fall.  According to the summary by Thomson Reuters, two-thirds of the retailers who reported same-store sales beat their projections, while the remaining third missed expectations.

It seems that heavy promotions and tax-free weekends helped many retailers, but the question is… Can the discounting be sustained into fourth quarter?